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E-mini S&P (December)

Last weeks close: E-mini S&P futures failed to close out above resistance at 2585.75 on Thursday. On Friday it was unable to hold price action at this level. We discussed Friday that a move below 2576.50 support will reinvigorate the bear case. Friday settled 2576.25.

Fundamentals: An early risk-off trade to start the week has seemingly pared itself into this morning. German Chancellor Angela Merkel has failed to form a coalition government after her party won a smaller share in Septembers election. If this holds true, a reelection is not out of the question. The uncertainty here is the further emergence of the far-right anti-immigration party, Alternative for Germany. The DAX has regained positive on the session and the S&P is also back to unchanged. It is a holiday shortened week and by shortened, we mean a few hours. Even so, we will not be short on trading catalysts; ECB President Mario Draghi speaks today at 8:00 am CT, Fed Chair Yellen speaks later tomorrow and on Wednesday we have Durable Goods and FOMC Minutes. Tax-reform remains in the forefront as the Senate battles, though no vote is expected until after the holiday week.

Technicals: The budding failure to finish out last week pins a lot of uncertainty on this roller coaster tape. We will continue to watch the 2576.50 level on a closing basis and for it to give a potential edge to the bull or bear camp. We enter the week with a neutral approach and await a stronger setup.

Last weeks close: Crude Oil futures gained almost 2.5% on Fridays session to once again bottom later Thursday and overnight into Fridays session. However, the tape is running into first key resistance.

Fundamentals: The November 30th OPEC meeting is now just more than a week away. We still believe strongly in the bull case as buyers are likely to keep Crude bid into and ahead of this meeting. We discussed yesterday in our Tradable Event this Week how the long position has extended to the largest since February; this signals that a near-term top is close, and we could be setting up for a massive buy the rumor sell the fact trade following the OPEC meeting.

Technicals: Price action is testing into first key resistance at 56.57-56.94, a wide pocket we had from our comments early Friday as we expected velocity to pick up and figured it would be hard to judge an exact point. Price action traded to a high of 56.93 before retreating; we will now tighten this level up to 56.71-56.94 and a close out above here should melt price action up to recent highs. Traders should still watch 56.57 on a closing basis and a failure to hold it would encourage a consolidation back into 56.19.

Last weeks close: Gold futures traded out above resistance at 1291.3-1292.9 and squeezed shorts just as we have been talking about, trading to a high of 1297.5 before settling at 1296.5.

Fundamentals: The Dollar gave up ground on Friday despite better than expected reads on Building Permits and Housing Starts. Ultimately, the push higher in the Dollar on the passing of tax-reform in the House was short-lived and focus is now on the Senate. Truly, this move in Gold on Friday was more technical and developing since midweek. It will be important to watch the development of the politics in Germany as this could encourage a safety trade.

Technicals: Gold battled against the 200-day moving average every day of last week and a rejection that began on Thursday opened the door for a strong session on Friday. Once price action made new highs on the week the shorts began covering. We remain bullish, but the tape is settling back in at what is now support at 1289.5-1290; the bulls must look to hold this level on a closing basis or face negating the constructive tape and open the door to a continued roller coaster ride.

Last weeks close: Natural Gas futures finished last week on solid footing, settling at 3.097 and trading to session highs of 3.134 before the electronic close. However, Sunday night was not so favorable.

Fundamentals: We are now into demand and withdrawal season, but the bears have not given up just yet. They continue to make their case for a warmer winter as many weather models have not disagreed and an open like last night gives them an edge to start the week. Still, we continue to believe that the risk is largely to the upside.

Technicals: Price action is weak coming into this morning, but it has held first support at 3.035-3.051 for now. A move off here and back above Fridays settlement would turn things immediately bullish. However, the bears have the edge for now and the key battle zone will be covering the gap from two weeks ago at 2.984-2.998.

Last weeks close: We got the inside session we were looking for on Friday with the tape holding Thursdays low at 124245 and settling at 12429.

Fundamentals: 10-year futures are trading up a few ticks this morning but safe have demand has pared back from where it was late last night. German Chancellor Angela Merkel has failed to form a coalition government and yes yields in Europe are little changed this morning, but this is a situation that must be monitored and if the President calls for a new election. ECB President Mario Draghi speaks at 8:00 am CT. Tomorrow Fed Chair Yellen speaks. Wednesday brings Durable Goods and FOMC Minutes.

Technicals: Price action got out above resistance at the 12431-125015 level for a brief time; a close out above here will give the bulls an edge. Still, resistance remains at last weeks high of 12507. The tape has been constructive, and we will look to the next couple sessions for further development and a potential edge.

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About the author

Bill Baruch is President and founder of Blue Line Futures a leading futures and commodities brokerage firm located at the Chicago Board of Trade. Blue Line’s mission is to put the customer first and bring YOU the best customer service, consistent and reliable research and state of the art technology. Bill has more than a decade of trading experience. Working with clients he focuses on developing trading strategies that present a clear objective for both long and short-term trading approaches. He believes that in order to properly execute a trading strategy, there must be a well-balanced approach to risk and reward.

Prior to Blue Line, Bill was the Chief Market Strategist at iiTRADER which followed running a trade desk at Lind Waldock and MF Global.

Bill is a featured expert on CNBC, Bloomberg and the Wall Street Journal as well as other top tier publications.

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